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Ryanair passengers can look forward to a drop in fares over the coming year but shareholders in the budget airline should brace for slower growth, boss Michael O’Leary has said.

The Irish low-cost carrier is likely to ignite a price war after disclosing that it plans to slash prices by an average of 7pc in the current financial year, which ends next March. Dublin-based Ryanair expects to make the heaviest cuts in the winter months, when fares could slide by up to 12pc.

Encouraged by cheap fuel prices in the wake of oil’s plunge, airlines like Ryanair have been flying more seats. It has coincided with a rise in terrorism around the world, however, including November’s Paris attacks and the Brussels...